The Singapore Branch of the Alternative Investment Management Association (AIMA), the industry trade association for hedge funds, warns that the draft directive on hedge funds and private equity that was passed by the European Parliament's Economic and Monetary Affairs Committee (Econ" may make it unduly difficult and onerous for Singapore based alternative investment managers to access the European market.

The proposals included a provision which said: "A professional investor domiciled in a European Union (EU) Member State shall not invest in shares or units of an Alternative Investment Fund domiciled in a third country, i.e. a non-EU country if any of the conditions in Article 35 are not satisfied in relation to that third country."

Some of the "conditions in Article 35" include the requirement that the third country grants EU Alternative Investment Fund Managers effective market access comparable to that granted by the EU to Alternative Investment Fund Managers from that third country. It also stipulates the requirement that the Alternative Investment Fund Manager has to agree with the European Securities and Markets Authority to comply with the Directive. There is also the requirement that the Alternative Investment Fund Manager has to agree to submit to the jurisdiction of courts in the Union in relation to any matters arising from this Directive.

Andrew Baker, chief executive of the Alternative Investment Fund Managers Association, a trade body representing hedge fund managers globally, said: "It is very disappointing that Econ has voted for this 'investor ban' which would effectively ban EU investors from investing outside Europe. This will have negative social consequences across the EU because it will be European institutional investors like pension funds who will be affected."

Alternative Investment Management Association